Apparently, these days, anyone can think that they understand the complex world of structured finance. The latest? An academic and a consumer investment adviser, who are set to call for Federal authorities to assume responsibility for rating RMBS and related structured securities, according to a press statement released Friday.
Scott Burns, investment strategist for AssetBuilder and a long-time financial columnist, and Laurence J. Kotlikoff, Boston University economics professor and author, have decided they have a solution to the credit mess no longer care about their professional reputations. Each wants to see the U.S. government establish a so-called Federal Financial Authority to rate securities – effectively placing warning labels on these “high-risk investments.”
That’s... more»
We’re not making this up.
The Oregonian reported Thursday that it had obtained a memo distributed by at least some Chase account executives to brokers, detailing how to manipulate the company’s own automated underwriting software in order to get a stated income loans approved that would otherwise be rejected. Hat tip here goes to Calculated Risk for uncovering the story.
The memo’s title: Zippy Cheats & Tricks. (Zippy, for the record, is Chase’s own AUS.)
We especially like how the AE — who was fired for sending the memo out — explained things to the press:
The March e-mail was sent by Tammy Lish, a former Chase account representative in Portland. Chase fired her days after discovering she had sent it.
“I did not write it,” Lish said. “It... more»
Patrick Harden at mREITs notes that there are a number of mortgage REITs looking to jump into agency-backed waters in the next few months, and asks:
How many more agency mREITs can the market absorb? …
While falling interest rates have created a juicy environment for agency mREITs, which only have interest rate risk to manage, too many competitors may cause pass-through certificates and CMOs to become overpriced.
It’s an interesting theory, and an interesting find. The theory is interesting, because if correct the agency market is suddenly flooded with buyers, prices will go up — bringing yields down, and likely mortgage rates with them. It’s also interesting because it means that more than a few players are eyeing a play in the MBS space in the months ahead, signaling... more»
What does it say about this crazy market market that (a) securitization all but froze towards the back half of last year and (b) that securitizing loans was still more popular than traditional portfolio lending?
Inside Mortgage Finance reported Wednesday that securitization as a share of origination activity in 2007 reached a new record high, with portfolio lending accounting for just 25.9 percent of $2.43 trillion in total mortgage production last year.
Not surprisingly, the GSEs saw astronomical share growth, too, what with subprime leaving the building with its tail between its legs starting last April or so.
Here at HW, we’ve got two thoughts: the annual numbers are likely strongly skewed, showing strong performance through the first half of 2007, followed by … ahem …... more»
Earlier today we published a contributed piece from an attorney on the front lines of the foreclosure mess — and he wrote about a Tennessee Supreme Court case pitting an insurer against a lender. The reason?
The insured property went into foreclosure, and then burned to the ground. When the lender went back to the insurer for restitution, the insurer balked and said the lender had a duty to disclose the foreclosure to it.
We here at HW think it’s likely to end up being a much more common problem. Arson has always been an issue when we’re talking about foreclosures. Here’s an example of the lengths some borrowers will go to:
Faced with foreclosure on her Russellville, Indiana home, Christina Snyder allegedly concocted the kind of plan that now has insurance executives... more»
How about “what is the size of price declines from the top so far?”
We obtained a report from Tradition Financial Services, Inc. that definitely deserves some attention. The firm located high points in each major market and then calculated just how far prices have fallen since then.
click for larger version
It can depend on the measure you use, of course — both the Case-Shiller and Radar Logic RPX are used to settle futures trades — but regardless, the declines are stunning in the aggregate sense.
San Diego, for example, peaked in November 2005. It’s now off 21.13 percent on the Case-Shiller and 24.66 percent on the RPX. Miami peaked in December 2006 and is now down 19.75 percent (on a Case-Shiller basis). Detroit. Los Angeles. Denver. Jacksonville. Portland.... more»
Housing Wire was named to a list of five “Must-reads in a Web 2.0 world” by Fortune today, along with our favorite blog ever, DealBreaker. We’re just humbled to be in such rarified company — and it’s motivating to see that the idea here of creating a financial news outlet for the mortgage industry has really caught on.
Did we mention that Google News has also picked us up this week?
As we’re growing, now seems like a good time to remind our regular readers that we’ll never lose the personal touch and voice — and snark, where needed — that has been the hallmark of HW since we first launched.
We swear we thought we’d seen it all. Every possible tie into the mortgage meltdown — lumber sales slowing, Home Depot and Lowe’s seeing profits dip, paper sales off. You know, the standard items tied to housing.
But now we’ve seen it all. Because we found Rescue Rick. Leave it to our chum RR to tie the mortgage mess to a need for better lawn safety. Yes, lawn safety.
His bottom line:
Think before you invest. It hurts. Think before you cut. It hurts.
Perhaps proving that the USA Today isn’t really so much a newspaper as it is light reading for those whose delicate minds can’t process actual news — we dare you to find a story anywhere in the paper longer than 1,000 words — the chart-toting daily named National Association of Realtors chief economist Lawrence Yun to its list of top 10 most accurate forecasters.
We’re still trying to process what sort of ‘accuracy’ USA Today used as its benchmark, as Yun has been fisked repeatedly by market participants for his lack of it. A sample, via the admittedly a little-too-obssessive Lawrence Yun Watch blog:
In September 2005 Yun predicted “The chance of a housing price decline in the DC area is close to zero, in my view. I anticipate that prices in DC... more»
Via Bloomberg, a little slice of American lore:
The New York Stock Exchange is closed today, as it has been every Good Friday for nearly a century and a half except for in 1898, 1906 and 1907.
That last one was in the same year as the infamous Panic of 1907, when the value of U.S. stocks plunged by more than a third. Hence, a legend that persists 101 years later: Traders get to stay home the Friday before Easter not just because it’s a Christian holy day but because of its association with one of history’s great bear markets.
